Slide 1: Investor Presentation – August 2021
Investor Presentation – August 2021
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements Statements contained in this presentation, other than statements of historical fact, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,”
Slide 3: Surgery Partners Introduction
Surgery Partners Introduction © 2021 Surgery Partners – Confidential & Proprietary Information
Slide 4: Surgery Partners is the Leading Independent Surgery Center Operator
Surgery Partners is the Leading Independent Surgery Center Operator… ~$2,117 million ~$301 million 31 States Q2 2021 TTM Revenues(1) Q2 2021 TTM AEBITDA (2) 117 Ambulatory Surgery Centers 17 Short-Stay Surgical Hospitals 4,400+ Affiliated Physicians 600,000+ Annual Patients (1) June 30, 2021 trailin
Slide 5: The Only Opportunity to Invest Directly in a Pure-Play of National Size and Scale
…And is the Only Opportunity to Invest Directly in a Pure-Play of National Size and Scale Surgical Facility Revenue(1) Number of Parent Surgical Specialty Focus Company Facilities(2) Revenue % of Total Public Only Pure-Play § MSK, Cardiovascular, $2.1B 95%+ Surgery Center 134 Ophthalmology & GI Oper
Slide 6: Diversified Mix Focused on High Value-Add Specialties
We Have a Diversified Mix, Focused on High Value-Add Specialties, Supported by an Aging Population… Surgery Partners’ Case Mix Other(2) Musculoskeletal(1) ü Strength with high acuity patients 16% ü Leading musculoskeletal platform 37% 21% ü Expansive network of surgical GI capabilities 26% ü Leading
Slide 7: Positioned to Pursue the $150B+ Total Addressable Market
…And are Positioned to Pursue the $150B+ Total Addressable Market (TAM) $150B+ Total Purpose-built, Veteran Focused on High Addressable Market Management Team Growth Specialties + + Superior Clinical Independent, Trusted Quality and Customer Scalable Platform Partner of Choice Experience + + Targeti
Slide 8: Surgery Partners Investment Highlights
Surgery Partners Investment Highlights © 2021 Surgery Partners – Confidential & Proprietary Information
Slide 9: Surgery Partners Investment Highlights
Surgery Partners Investment Highlights Large Market Opportunity Supported by Multiple Macro Growth Drivers and 1 Aligned with the Mega Trend: High Quality, Low Cost Care in Specialized Settings 2 Industry Leader Focused on Higher Growth, Higher Acuity Specialties Exceptional Clinical Quality Coupled
Slide 10: Over $150B Total Addressable Market (TAM)
1 Over $150B Total Addressable Market (TAM) Same-Facility volume Physician recruitment in De Novos growth targeted specialties Organic Expansion programs Case shift in core specialties like Investment in innovative Orthopedics, Spine & Cardiology technologies for service line expansion Deployment Mi
Slide 11: TAM: Over $90B Outpatient Surgical Market and ~$60B Migrating
TAM: Over $90B Outpatient Surgical Market and ~$60B of 1 Cases Migrating to Outpatient Annual Revenue (US) Annual Volume Growth $500B+ $230B surgery -2% Inpatient ~$60B Incremental Shift of $470B+ Inpatient Surgical Cases $55B+ surgery 2% to the Outpatient Setting HOPD $35B+ surgery 6% ASC Payments
Slide 12: Increasing Number of Procedures Projected to Migrate to Lower Cost Settings
Increasing Number of Procedures Projected to Migrate to 1 Lower Cost Settings Migration of Orthopedic, Spine and Cardio procedures will fuel rapid ASC growth Percentage of procedures performed in ASCs 80% 68% 70% 66% 61% 60% 58% 52% 50% 44% 40% 33% 30% 30% 20% 10% 10% 10% 7% 4% 0% Cardiology Spine O
Slide 13: Leading Musculoskeletal & Cardio Platform Well Positioned
Our Leading Musculoskeletal & Cardio Platform is Well 2 Positioned to Capture this Opportunity $3 billion 15%+ Musculoskeletal Annual savings by shifting Surgery Partners’ historic 50% of joint cases to ASCs(1) orthopedic case growth 14 80%+ Robots added in 2020 and Surgery Partners’ facilities 2021
Slide 14: Differentiated, Capital Efficient Approach to Orthopedics & Cardiology
Differentiated and Highly Capital Efficient Approach to 2 Growing and Enhancing Orthopedics & Cardiology… 1. Demographic and site of service 7. Supply chain initiatives trends leading to future growth 6. Payer strategies 2. Physician Recruitment 5. In-Market and New Market 3. Add orthopedics and Tra
Slide 15: Driving Strong Case and Revenue Growth
2 …Driving Strong Case and Revenue Growth… +3.5x case growth over 9 years Case Volume by Specialty 195,420 ü Net Revenue CAGR of 136,774 +30% from 111,101 2012 to 2019 82,648 78,136 ü Case mix 52,838 aligned with higher acuity 15,051 14,090 Other (1) GI Ophthalmology MSK June '21 TTM 2012 © 2021 Sur
Slide 16: 15%+ Orthopedic Service Line Volume Growth
2 …And 15%+ Orthopedic Service Line Volume Growth 95 Locations(1) 44,729 90k+ Orthopedic Procedures Annually 25,167 650+ Orthopedic Physicians 144%+ Joint Case Growth at ASCs (2) 1H 2017 1H 2021 Orthopedic Case Volume (1) Facilities that performed orthopedic cases between 2019 and YTD 2021 © 2021 Su
Slide 17: Considerable Growth Ahead for Joint Replacements
2 Considerable Growth Ahead for Joint Replacements Inpatient and Outpatient Hip & Knee Replacement Forecast Volume (millions) CAGR ’18 – ’28P 2.0 57% 48% Outpatient = 20% 1.5 40% 15% 31% 15% 23% 1.0 85% 77% 69% 60% 52% 43% Inpatient = -0.7% 0.5 - 2018A 2020P 2022P 2024P 2026P 2028P Inpatient Outpati
Slide 18: Clinical Quality and Patient Experience: Our Mission
We Focus on What Matters Most: Clinical Quality and 3 Patient Experience OUR MISSION ENHANCING PATIENT QUALITY OF LIFE THROUGH PARTNERSHIP © 2021 Surgery Partners – Confidential & Proprietary Information 18
Slide 19: We Hold Ourselves to the Highest Standards
3 We Hold Ourselves to the Highest Standards… Average Deficiencies per Survey(1) Average Deficiencies per Survey(2) 25% Fewer 48% Fewer 10.00 Deficiencies 40.00 Deficiencies 8.4 33.7 30.00 6.3 5.00 20.00 17.6 10.00 0.00 0.00 Surgery Partners All Other Surgery Partners All Other ASCs Surgical Hospita
Slide 20: Regularly Report and Benchmark Performance to Emphasize Culture of Safety
…And Regularly Report and Benchmark Our Performance 3 to Emphasize our Culture of Safety… Sample Metrics Sample Reporting ü Patient burns ü Patient falls ü Wrong site ü Hospital transfers procedures ü Surgical site ü ER visits within 24 infections rate hours of discharge ü Hospital admissions ü Norm
Slide 21: A Proven Record of Exceptional Clinical Care
3 …With A Proven Record of Exceptional Clinical Care… © 2021 Surgery Partners – Confidential & Proprietary Information 21
Slide 22: Clinical Efficacy Resulting in a Better Patient Experience
…And Clinical Efficacy that Results in a Better Patient 3 Experience Nationwide Hospitals Surgery Partners(1) Four Star 29% Five Star 71% Best-in-Class Patient Experience (1) Includes hospitals that have been owned / operated by Surgery Partners for prior 12 months © 2021 Surgery Partners – Confiden
Slide 23: We Focus on Patient Experience
3 We Focus on Patient Experience… Cleanliness and comfort 96 Facility Communication on insurance and financial responsibility 93 88 Process 94 Financial Overall Exceptional administrative Patient and clinical staff Experience Kept informed and procedure explanations 94 95 Personal People Patient exp
Slide 24: Best-in-Class Patient Net Promoter Score
…Which has Resulted in a Best-in-Class Patient Net 3 Promoter Score Patient Net Promoter Score 94 89 79 62 62 © 2021 Surgery Partners – Confidential & Proprietary Information Note: Survey conducted from Dec ‘19 – May ‘20 24
Slide 25: We Align Ourselves with our Physician Partners
3 We Align Ourselves with our Physician Partners… Multi-Site Management Three-Way JVs Facility Facility Facilities Two-Way JVs Services Health Payors Systems OR We have a tailored approach to partnership and physician engagement © 2021 Surgery Partners – Confidential & Proprietary Information 25
Slide 26: Highly Satisfied Physicians
3 …Which Results in Highly Satisfied Physicians… Physician Net Promoter Score 89 Exceptional Provider Experience 81 Aligned equity ownership model 79 62 High NPS 62 © 2021 Surgery Partners – Confidential & Proprietary Information Note: Survey conducted in 2015; 366 respondents. 26
Slide 27: Strong Physician Engagement and Retention
3 …And Strong Physician Engagement and Retention BETTER PARTNERS. BETTER CARE. We are focused on physicians. Through decades of experience, we have observed that an outstanding patient experience begins with an outstanding physician relationship. Everyone wins when physicians have what they need to
Slide 28: We Operate in a Highly Fragmented Market
4 We Operate in a Highly Fragmented Market… Number of ASCs in the U.S. Number of POHs in U.S. US Ambulatory Surgery Centers (2020) Total = 5,851 ASCs 1,649 4,202 ~ 240 100% Other Multi-site 80 Operators Independent Single-site ASCs (10%) (36%) 60 Other 40 National 94% Platforms Hospital Affiliated A
Slide 29: Benefit From an Integrated Pure-Play Platform
…That Can Uniquely Benefit From an Integrated Pure-Play 4 Platform… 94% of surgical facilities/ clinical practices migrated to end-state platforms, representing 94% of revenue 95% of surgical facilities/clinical practices migrated to common claims clearinghouse 95% of surgical facilities integrated
Slide 30: Proven Track Record of Delivering Organic Synergies
…With a Proven Track Record of Delivering Organic 4 Synergies While Enhancing Patient Experience Managed Care Supply Chain • Enhanced centralized • Enhanced centralized team with seasoned team with seasoned executives executives • Continuing to enhance • Migrated to one our health plan value company
Slide 31: Re-Accelerating the Pace of Capital Deployment
We Focused on Short-Stay Surgical and are 4 Re-Accelerating the Pace of Capital Deployment… Closed or Sold Acquisitions Transaction Highlights • Refocused portfolio on growing short-stay surgical assets • 7 transactions to enhance presence and footprint in Idaho • 4 transactions to enhance presence
Slide 32: YTD 2021, Closed Over $100 Million of Acquisitions
YTD 2021, We Have Closed Over $100 Million of 4 Acquisitions.. 2021 Select Acquisitions Over $100m of capital San Francisco, CA deployed year-to-date Opthamology San Jose, CA Closed 6/21/2021 Multi-specialty (gastroenterology, orthopedics, general surgery) Average year one deal Closed 8/1/2021 multi
Slide 33: Strong Pipeline of Near-Term Opportunities Under LOI
…With a Strong Pipeline of Near-Term Opportunities 4 Under LOI Selected Pipeline Opportunities Target Attractive Opportunity Status Type Geography Specialty Closing pipeline of A Under LOI ASC Northeast GI 3Q21 near-term opportunities Surgical Hospital / B Under LOI Practice Central Orthopedics 2H21
Slide 34: Uniquely Positioned to Enable Value-Based Surgical Care
5 Uniquely Positioned to Enable Value-Based Surgical Care Partner to Enable Value-Based Care National footprint of outpatient surgical facilities Risk- Health Based Plans Providers Total Joint Replacement Price ~$30K ~$15K Meaningful site of service savings(1) Health Systems 94% Quality outcomes and
Slide 35: A Dynamic Growth Model
6 A Dynamic Growth Model Top-line Growth Margin Expansion Capital Investment Volume Procurement Acquisitions Rate Revenue Cycle Expansions Org / Workflow Managed Care De Novos Efficiencies Mid-teens AEBITDA growth target with Capital Deployment © 2021 Surgery Partners – Confidential & Proprietary In
Slide 36: Surgery Partners Financial Overview
Surgery Partners Financial Overview © 2021 Surgery Partners – Confidential & Proprietary Information
Slide 37: First Half 2021 Financial Highlights
First Half 2021 Financial Highlights Surgical Cases Net Revenue ($m) CAGR = 1.4% CAGR = 10.8% $1,058.2 257,705 264,854 $862.2 $815.7 197,899 1H 2019 1H 2020 1H 2021 1H 2019 1H 2020 1H 2021 Same-Facility Growth AEBITDA ($m) Volume Rate Revenue 29.9% CAGR = 15.3% $148.8 33.8% 7.3% $112.0 20.2% $104.7
Slide 38: Business has Remained Resilient Through Covid Impact
Business has Remained Resilient Through Covid Impact Same Facility Net Revenue (% of PY) 145% 117% 108% 106% 101% 103% 81% 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 © 2021 Surgery Partners – Confidential & Proprietary Information 38
Slide 39: 2021 Outlook
2021 Outlook • Projected Revenue growth of 18% to 20% over 2020, with a bias towards the high end of the Q4 as a % of FY Adjusted EBITDA range • Adjusted EBITDA projected to be at least $325M 31% to 32% 35.4% of 2021E − Recent acquisitions projected to contribute Adjusted 32.6% ~$5M to 2021 performa
Slide 40: Long-term Financial Targets
Long-term Financial Targets § Same-facility revenue growth of 7.6% in 2019; 2020 pre-COVID Organic same-facility growth of 9.4%(1); first half 2021 same-facility revenue AEBITDA Double growth of 29.9% Growth Digit § Industry tailwinds in MSK and Cardio (16%+ p.a. MSK case volume growth from 1H 2017
Slide 41: Surgery Partners Investment Highlights
Surgery Partners Investment Highlights $150B Total Addressable Market Large Market Opportunity Supported by Multiple Macro 1 Growth Drivers and Aligned with the Mega Trend: High $60B of Inpatient Cases Migrating Quality, Low Cost Care in Specialized Settings to Outpatient 7.5%+ Industry-leading Same
Slide 42: Appendix
Appendix © 2021 Surgery Partners – Confidential & Proprietary Information
Slide 43: 2022 Preliminary Medicare OPPS/ASC Payment System
2022 Preliminary Medicare OPPS/ASC Payment System • +2.3% aggregate increase for ASC rates • +2.3% aggregate increase for hospital outpatient rates • Reinstatement of the Inpatient Only List (IPO) • Removal of 258 procedures from the ASC Covered Procedures List (ASC CPL) originally added for the 202
Slide 44: CMS Reaffirmed Total Joints and Cardio are Appropriate in ASCs
CMS Reaffirmed Total Joints and Cardio are Appropriate in ASCs • ...we expect that the volume of THA and TKA procedures will continue to increase in HOPDs, and that significant numbers of Medicare Reaffirmed Total beneficiaries 65 and older will potentially undergo these procedures in Knee and Hip t
Slide 45: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA The following table reconciles Adjusted EBITDA to Income before income taxes, the most directly comparable GAAP financial measure (unaudited): TTM Six Months Ended June 30, (in millions) 6/30/2021 2021 2020 2019 Income (loss) before income taxes $ 26.4 $ 17.1 $ (28.